Toyota U.S. Chief Sees Challenges Ahead for Auto Industry

"Our aim has been to be a major economic contributor here, and a first-tier U.S. automakers - and we have always had a special focus on California."

That was how Yoshi Inaba, president and CEO of Toyota Motor Sales USA, Inc., described Toyota's commitment to North America and particularly to California in his keynote address on "California as a Home for International Business" during the UCLA Anderson Forecast Conference Dec. 6 in Korn Convocation Hall.

Inaba listed a series of economic contributions that Toyota has brought to the U.S. and California. He said the company has invested over $10 billion in the U.S., and its dealers have spent nearly $9 billion more. Nationwide, Toyota directly employs 28,000 Americans and another 95,000 more work for Toyota dealerships. "That's a total of 123,000 American jobs - more than Microsoft, Oracle and Coca-Cola combined," Inaba said.

Following Toyota's principal of "thinking globally but acting locally," the company has eight U.S. manufacturing facilities and a ninth under construction. About two-thirds of the cars and trucks Toyota sells in the U.S. are now built in America. With 1.6 million in sales last year and a 10 percent market share so far this year, Toyota is the third best-selling automobile brand in the U.S., behind Ford and Chevrolet.

In focusing on California, Inaba said, "The Golden State is our home state." Toyota is the No. 2 selling brand in Southern California and No. 1 in Northern California. To illustrate the company's commitment to California, Inaba pointed out that 9,000 people - nearly one-third of all Toyota's direct employees in the U.S. - work in California.

He also cited Toyota's economic contributions in terms of jobs provided through dealers and suppliers, expansion of Toyota's headquarters in Torrance, and the Torrance headquarters of Toyota Financial Services, U.S.A. Moreover, California is home to Toyota's second-largest parts center worldwide.

In addressing the future of the global automotive community, Inaba said the industry will soon wrap up a strong year, but there are serious long-term challenges ahead. In the short term, everyone is asking the question: "Is there life after 0% financing?" Inaba said. Yet the industry is expected to close the year with total sales of more than 17 million cars and light trucks. "Given all that has happened, that is astounding," Inaba said. "If the pace holds it will be the second best year ever."

While there are some positive signs boosting a fragile economy, Inaba said the auto sector has not been immune. "I think we will continue to see shakeups and reorganizations within the auto industry as costs are brought in line with the deflationary economic environment."

He also pointed to some serious social issues facing all automakers that compete globally - these are quality of life issues related to air pollution and traffic congestion. "We must take serious steps to clean up our act in a way that meets the needs and desires of the consumer while at the same time acting responsibly for all of society."

Cars and trucks still produce about one-third of the smog in the U.S. Toyota has responded to environmental concerns with Prius-the world's first mass-produced hybrid vehicle. Prius cuts fuel consumption in half while reducing smog-forming emissions by up to 90 percent. Toyota is also developing fuel cell vehicles, although production is years away, and working to make its other cars and trucks more environmentally friendly.

And despite America's continued "love affair" with the automobile, Americans ranked the automotive industry third from the bottom on a list of industries perceived to be helping solve environmental problems.

In addition to addressing pollution, the industry also needs to help find ways to ease traffic congestion, starting with borrowing studies and systems being tested in Japan, Europe and other densely populated areas. "We need to find solutions, which turn these social concerns into opportunities to meet customers' changing needs and desires while enhancing the quality of life we all expect."